China stock

Stupid China Stories

By Paul Krugman

So a stock crash in China triggered a big decline around the world, while I was trying to have a personal life (and succeeding, actually). Leaving aside whether this really made sense, why should events in China matter for the rest of us?

Well, you and I might think that it’s because China is a pretty big economy — a huge buyer of commodities and a significant importer of manufactured inputs too. So when China slumps, you can and should expect knock-on effects elsewhere.

But trust the Republican field to declare that it’s all Obama’s fault. Scott Walker wants Obama to cancel a state dinner with Xi; Donald Trump says that it’s because Obama has let China “dictate the agenda” (no, I have no idea what he thinks he means). And Chris Christie says that it’s because Obama has gotten us deep into China’s debt.

Actually, let’s play a bit with that last one, OK? You could, conceivably, tell a story in which America becomes dependent on Chinese loans; then, when China gets in trouble, it demands repayment, pushing us into crisis too. But any story along those lines has a corollary: we should be seeing a spike in US interest rates as our credit line gets pulled. What you actually see is falling rates:

Oh, why am I even bothering?

But remember: all the experts said that the GOP had an unusually strong field, a very deep bench, a lot of talent running for president.